Treasury has made the case in its Tax Discussion Paper for boosting GST revenue and said that Australia‘s GST at 10% is one of the lowest in the world with the OECD average just under 20%.
Small business group COSBOA welcomed reform of the tax system and said that if zero company and personal tax are the norm then a consumption tax supported by all and applied to all needs to be in place.
The National Retail Association backed Treasurer Joe Hockey’s call for an end to the loophole that allows overseas businesses to sell their goods into Australia without charging GST.
The paper said that the GST applies to most types of goods and services but a significant portion of consumption is excluded, with most categories of consumption being GST-free, such as fresh food, health, education and childcare.
“Any change to the GST rate or base would require the unanimous support of the state and territory governments, the endorsement of the Australian Government and the passage of relevant legislation by both Houses of the Australian Parliament,” Treasury said.
Treasury noted that imported goods (not services) are generally subject to GST, unless the value is $1,000 or less.
In a statement last week, Mr Hockey pointed to overseas businesses where GST is not collected, while retailer groups have, since 2013, called for action on the low threshold for imported online goods of a value of $1,000 or less.
“The tax discussion paper begins a dialogue on how we create a tax system that supports higher economic growth and living standards, improves our international competiveness and adjusts to a changing economy and new opportunities,” Mr Hockey said.
Mr Hockey, who indicated he wants a debate on Australia’s GST, said that the rise of the digital economy and globalisation presents significant challenges for the effectiveness of the tax system. Submissions and suggestions on the discussion paper can be made at the interactive website http://bettertax.gov.au/ until 1 June 2015.